Overview Of Postponement Of The Payment Of HMRC Tax
Postponement of the payment of HMRC tax can be done under Section 55(3) of the Taxes Management Act 1970.
This arises when an HMRC tax assessment or closure notice is considered to be excessive and the taxpayer feels they have been overcharged.
How To Apply For Postponement Of Tax Payment
A taxpayer has two options to seek to postpone tax considered overcharged on an assessment or HMRC closure notice:
- Apply in writing within 30 days for confirmation of the amount of tax to be postponed subject to the outcome of an appeal; or
- Apply to the Tax Tribunal when the postponed amount of tax is not agreed within 30 days of HMRC’s decision.
Tests To Meet To Postpone Payment Of Tax
In order to succeed with an application to postpone the payment of tax under Section 55(3) of the Taxes Management Act 1970 the taxpayer does NOT need to prove all relevant facts or succeed in all legal arguments which will have to be proved.
The position was highlighted in the case of Inspector of Taxes v Pumahaven Ltd. [2003] EWCA Civ 700:
- The taxpayer has to show ‘reasonable grounds’ for believing that they are overcharged by the HMRC tax assessments in question.
- In order for grounds to be ‘reasonable’ they cannot be ‘fanciful, imaginary or contrived’ and must be ‘agreeable to reason, not irrational, absurd or ridiculous’.
- There must be a solid basis, in the form of evidence, for the grounds put forward.
